Strategic management

2021/2022 Program
Instructor: Evangelos Zographs

Felismino Fernandes da Costa

Hans Malik Vales Moiane
Nadine Mamombe

“Shein v Zara Digital change in fast fashion”

The Fast-Fashion industry the Industry's value chain and using porter's five force
model
 Introduction

We're here to talk about two quick fashion firms that have already
established themselves.

Shein: How It All Started

Chris Xu founded the Chinese brand Shein in 2008. SheInside was the original name
of Shein, from the beginning they targeted customers from countries such as the
USA, France and the UAE. It was originally a woman's wedding dress website that
offered affordable gowns. Shein now offers apparel and accessories for men, women
and children.

Zara: How It All Started

Zara is older than Shein, having been founded in 1975 by Amancio Ortega in Spain.
Zara started what we call fast fashion. They became an instant hit and garnered
popularity by offering their customers low-cost copies of popular and pricey clothing.
With their increasing popularity they opened stores in New York, Paris, Norway,
Israel, Portugal, Belgium, and 90 other cities. Zara also founded Inditex, a fashion
distribution system that keeps up with changing trends.

GENERAL INFORMATION

Fast fashion retailers such as Zara are affordable and that does not make them
cheap - a dress from Zara will range from €30, whereas a similar dress from Shein
will be half the price of Zara. Shein has a wider range of styles, as well as colours
and patterns. Shein promotes sexy as well as curvy. Shein's main objective is to get
people to shop online exclusively. They also reach out to every type of customer so
they enjoy and love fashion regardless of their financial means.
Competitive advantage of Shein compared to Zara in terms of technology

Shein have maximised their presence on social media and have gained word of
mouth advantage as people talk about them without any sponsorship. They are able
to produce and market new trends in a matter of days whereas Zara will need 3
weeks at least. They have attained a strong relationship with Chinese suppliers and
act like Uber, fast and efficient.

STRATEGIC INITIATIVES/SOLUTIONS

Targeting Gen Z as they value their money and require cheap products. Gen Z
customers use social media to complain or promote brands so this will generate free
publicity for Shein and make sure their site is viewed worldwide thus engaging them
with more customers who didn’t know about it beforehand. Gen Z consumers are
many as they entail parents of children aged 1 and 15, young adults and women,
and they are the top and frequent consumers worldwide.

By analysing latest trends from all their competitors and then changing them
marginally thus being able to have a variety of products and brands which are price
orientated so shopping becomes fun and luxurious. As trends are constantly
changing so are the wardrobes of consumers. By having an easy to use app which
has a wide variety of styles at cost effective prices will generate more consumers.

Innovative marketing: by using digital technology to connect and build relationships

with their consumers. Shein was able to accelerate their presence during the
pandemic as their core drive is for people to spend more time browsing the web and
shopping online. Shein has a strong social media presence and they are marketed
by everyday people which makes users more inclined to visit their site and buy from
them. Free publicity from social media users who talk about them, whether it be
negative or positive. They have a constant stream of coupons and discount codes
and are inclusive, having sizes ranging from XS TO 4XL which is more than other
retailers.
Have a physical store in top fashion countries so their customers have the
opportunity to see the products and try them on before purchasing.

Strong relationship with suppliers by supporting them with financial loans and being
known for paying their suppliers ahead of time - payments within 6 weeks.

New way to monetize growing user base. They might need to accept other payment
methods such as Apple pay or Amazon pay as they have a high consumer base to
tap into their customers as well.

Shein v Zara
S.W.O.T Analysis
Shein

Strengths Weakness Opportunities Threats

Worldwide Slow delivery Growth of e Data breach

shipping commerce fashion
industry

Competitive prices Lack of warehouse Reaching people Consumer

from all economic preferences
backgrounds always changing

Extensive Very discreet do Using virtual Death of brand

selection of not disclose to ambassadors and loyalty due to
clothes customers their influencers to gain market
sources attention fragmentation

Positive sales Customers read Expanding their Online competition

regardless of reviews and are online presence from Amazon,
taxes assaulted with the and attention Alibaba and the
negative reviews rest of companies
selling products
online
Shein's SWOT analysis.
 Zara

Strengths Weakness Opportunities Threats

Physical stores Physical store Sustainability Higher prices than

dependance their competition

Switch to online Expansion to US Customisation COVID 19

and Asia-pacific Pandemic

Design Team Fast Fashion Personalization Steef competition

Supply chain Ethical work Resale

practices Government
regulation

Zara SWOT analysis has shown how creativity and commitment to customers can
help a brand overcome obstacles. Getting in touch with your audience, as well as
developing a solid relationship with them, to provide them with what they want.

Events determine fashion, people dress their best for different functions such as job
interviews, reunions and corporate events. In terms of technology the internet has
sparked the ability for anyone to have their own shop. There has been an increase in
fashion shows on television with the likes of Project Runway. Most brands like Zara
have their clothes sewn in Asian countries to cut down on cost, but they still have
legal regulations to follow such as tax and export restrictions. Fashion has a huge
impact on the environment and it is not positive. Clothes are made from cotton which
needs to be picked, shipped, transformed with chemicals and other hazardous
materials. On top of this fast fashion means quick to consume and even quicker to
dispose of. There are landfills with tonnes of discarded clothes around the world and
they are not easily biodegradable.
RECOMMENDATIONS

Rather than handling everything themselves, Zara needs a quick response time, this
can be achieved by training their in store management to make quick judgments
rather than sending the vast suggestions to their headquarters in Spain and letting
them decide. Once managers have made a decision they can get feedback from
headquarters and make other necessary suggestions.
Zara's vertical integration provides a number of benefits, but it also has a
disadvantage as it reduces flexibility in the supply chain as it focuses on small batch
distribution so there are no discounts to be gained, another disadvantage is it
increases inefficiencies in their organisation.
Zara needs to cultivate stronger relationships as well as increase their number of
suppliers as they cannot compete with Shein at the moment in terms of supply chain
management. They need a service like Uber where as soon as they have a design
they upload it, book a sewer and have their vision produced within a few hours and
as soon as its approved be able to mass produce it within 3 days and be delivered
within 2 days. Their online store needs to have a wider variety of products with the
same superior quality so consumers turn to their online shopping and have regular
discounts like Shein to remain competitive and garner a wider range of customers in
hard to reach places.
Shein will need to introduce more payment methods such as mobile payment as in
the case of Gen Z with Iphones they have Ipay. Shein can also introduce an
algorithm with your body type and facial features which you can dress virtually to see
the fit and look of the clothes you choose. They also need to capitalise on their social
media presence by having livestream launches of new collections so everyone
around the world can see it and talk about Shein that much more. They need to
capitalise on failed brands and their physical stores and purchase them at a cheaper
price to reduce cost of construction, as well as the need to get permits to construct
their stores. Shein can also have a new way of thinking. Instead of being in the throw
away business they can be in the recyclable business,by rebuying faded clothes and
making something else with these garments.
IMPACT OF RECOMMENDATIONS
As both Zara and Shein are in the fast fashion industry targeted and influencing
marketing have been used since the pandemic and has become a staple, as people
we like to follow what we think is relatable to us and in other instances unattainable
unless we have a certain lifestyle.
Zara’s ability to deliver on its customers' desires for trendy goods at reasonable
costs, as well as its ability to co-create with their customers make them enviable and
unique and will see more customers going to them and securing brand loyalty.
One of the secrets of Zara's global success is its culture and respect for the concept
that no one is a greater, more authentic trendsetter than the customer – and this
philosophy must be represented in all of the company's future business strategies.
By becoming more environmentally friendly by reducing their use of toxic chemicals
and carbon emissions as well as being transparent, shein can get more customer
loyalty and trust from consumers as at the moment they are lacking in these
departments and gather positive attention. In terms of Shein they will gain more
credibility as there will be a source to go to if they have physical stores. It will also
increase their sales as consumers can directly compare with the other brands. In
terms of the algorithm, Shein will be a game changer as a replica of the customer will
try the clothes and see the fit, style and size virtually before purchase.

Below is a video link from tiktok of hauls from Zara and Shein that reflect the
difference in quality as well as prices.

/www.tiktok.com/@outfitsfinder_/video/7083978385692609797?is_copy_url=1&is_from_web
app=v1&refer=embed&referer_url=https%3A%2F%2Fthred.com%2F&referer_video_id=708
3978385692609797
Here are pictures of similar dresses sold by Zara and Shein and their difference in
prices.
Sources
https://thesocialgrabber.com/marketing-strategy-and-swot-analysis-of-shein/

https://daxueconsulting.com/shein-market-strategy/

https://www.fashionatingworld.com/new1-2/a-new-business-model-can-help-shein-ex
pand-product-and-consumer-base

http://www.thedwgroup.com/markets/

https://literallydarling.com/blog/2020/11/24/fast-fashion/

https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-cultur
e-of-customer-co-creation/

https://www.scirp.org/journal/paperinformation.aspx?paperid=108440

https://www.ie.edu/insights/articles/zara-technology-and-user-experience-as-drivers-
of-business/

https://www.bing.com/ck/a?!&&p=b1aea0548f0e549be484db1320ae3250da9466b07ad31438bc4b53f
3081d9b08JmltdHM9MTY1MzMwNjI3OSZpZ3VpZD04ZWE5ZmRmYi1iYzViLTRiYzItYWZiMS03OTVj
MzFjNTU5MjcmaW5zaWQ9NTIxNA&ptn=3&fclid=ba23d5bf-da8d-11ec-b016-711602f529f7&u=a1aH
R0cHM6Ly93d3cuaW5zdGFncmFtLmNvbS96YXJhLnZzLnNoZWluLw&ntb=1